Today, the Knesset Economic Affairs Committee held a special session on the issue of the “captive audiences” in railway stations and hospitals, following the Consumer Council’s fight to modify public/government tenders, so that - in awarding the tender, preference is given, to those offering a lower price to the consumer. Today, the situation is that captive audiences – for instance, those in railway stations or in hospitals – are forced to purchase products, such as coffee and so on from the concessionaires who operate the food outlets in these places, at inflated prices.
An inquiry carried out by the Council on this issue shows that, in tenders conducted by government/public bodies, the winner is chosen on the basis of criteria aimed to maximizing the profit to those bodies; there is no competition or supervision over the price of the product or service given to the consumer, who, in most instances, is a captive consumer who has no choice. In such circumstances, consumers are likely to suffer damages and to pay unreasonably high prices for the products or services provided in the framework of the tender, because of the lack of competition.
According to Adv. Ehud Peleg, CEO of the Israel Consumer Council, this damage to consumers is particularly severe, in light of the fact that it is taking place in the framework of government or public bodies, whose management should be aimed to the interests of consumers. This is the case with the high prices for coffee at refreshment stands located in railway stations, under a tender agreement, and with the high prices for food and parking at the ten largest hospitals in Israel.
Peleg has presented the position of the Israel Consumer Council, according to which, in tenders by government or public bodies for the supply of services that put consumers in the position of a “captive” customer, more weight should be given to consumer interests as a reflection of the public interest. Peleg explained that “in those places where the consumer is a ‘captive,’ and the tender conditions do not include clauses preventing the imposition of unreasonably high prices on consumers, this creates a situation in which the consumer’s distress is being exploited. Therefore, it is important to include in such tenders criteria relating to the pricing levels for the products being sold, so that preference is being given to tender applicants offering the lowest prices to consumers.”
In light of the fact that the Railways tender has already been awarded, Peleg has requested that the chairman of the committee, MK Prof. Avishai Braverman, demand the Railways to intervene over prices, should these be found to be excessively high, in line with the clause in the tender agreement that authorizes them to do so.